At Heritage, we believe that education is an important part of the estate planning process. On this blog we will be sharing some information, articles, and opinions that you may find helpful along your way.

Long-Term Care Insurance

01/06/2016

The possibility of acquiring a long-term care insurance policy can bring confusion, a waste of time and a headache.

The cost of nursing home care can be extreme and more and more people are looking at possible solutions to paying those costs. An industry arose to answer those concerns and insurers began offering policies to cover those costs. While it sounds like it might be a simple solution to a difficult problem, it appears the process isn't so simple.

The key thing to understand is that 90% of the companies that offered long-term care policies in the past no longer do so. These companies discovered it is very difficult for insurers to make money on the policies.

Those companies still in the market offer a confusing array of policies with benefits and costs that are not always easily understood. It can be migraine-inducing for people to figure out what they are getting if they purchase a policy.

It can also be a complete waste of time for a couple of reasons.

First, 40% of people who apply for the policies are turned down for health reasons. Second, the policies do not offer life coverage. They are short term policies and if your need for coverage exceeds the policy term then the money spent on premiums is wasted.

If you are looking into long-term care insurance it might be wise to seek independent advice such as from an estate planning attorney or elder law attorney to be sure the policy is of value to you and what benefits you would actually receive.

11/20/2015

A long-term care insurance policy can help off-set the extreme expense of a nursing home but, unfortunately, problems can arise with an unintended lapse in the long-term policy.

An estate plan can end up of little value if the cost of a nursing home wipes out savings and insufficient assets leave heirs without an inheritance. End-of-life medical care insurance can be a welcome addition to off-set the problem.

Long term care insurance policies are a popular and effective solution. However, more than a third of the people who purchase long term care policies let them lapse before they need them to pay for nursing home expenses.

Most of the time people do not intentionally let the policies lapse. Instead, they simply forget to pay the premiums.

This may not happen out of ordinary forgetfulness but rather because as we age we often start to suffer from cognitive impairments.

Unfortunately, the people who suffer from the cognitive impairments that would make them forget to pay the insurance premiums are the very same people who are most likely to need long term care in a nursing home.

The article does point out a potential solution to this problem. It is possible to have the insurance policy statements sent to a trusted third party who can make sure that the premiums are paid.

The time to set up a strategy to prevent the lapses is when the policy is purchased rather than later and risk falling victim to forgetfulness. For more information on long-term care insurance or how to protect yourself from the nursing home without it, attend one of our free workshops.